After spending decades as Wall Street darlings, arrogant business leaders are out of fashion. The new hotness for CEOs these days? Displaying humility, self-awareness and honesty.
In this new world, a good leader doesn’t brag about his “TEN BILLION DOLLARS,” as Donald Trump’s campaign did last week. A good leader doesn’t rank his workers and fire the bottom 10 percent each year, as revered General Electric CEO Jack Welch did back in the day. The new CEOs project humility. They apologize when they screw up. They admit when they don’t know something, and they empathize with their workers and treat them decently.
Wild, right?
“You have to be real and authentic. It requires having strong character,” the former CEO of Medtronic, Bill George, told The Huffington Post. “The Donald Trumps of the world, they make it in politics, not business.”
Since declaring his intention to seek the Republican nomination for president last month, Trump has been out on the campaign trail, touting his leadership skills and experience. But for the most part, the business world has actually moved past his autocratic style. The shift has happened gradually over the past few years, in part because the financial crisis bred a deep mistrust for overly confident leaders and in part because social media has made it much easier to call out a boss for arrogance or wrongdoing.
“The world has become more transparent, and the bar is being raised for who the leader is, not just what they know how to do,” said Fred Kiel, a former chief executive who now runs a consulting firm focused on leadership.
Highly regarded CEOs are nearly six times as likely as poorly regarded CEOs to be considered humble, according to a survey of 1,700 executives across the globe (minus CEOs) released in March by Weber Shandwick, a public relations firm. Weber Shandwick also found more than 50 articles that mentioned “CEO humility” in 2014 — about twice the average number for each year going back a decade or so.
Humility in this case shouldn’t be confused with shyness, said Leslie Gaines-Ross, a public relations strategist at Weber Shandwick who advises executives on how to enhance their reputations. Rather, it’s about being more thoughtful and introspective. “It used to be that there were many more celebrity CEOs,” she said. “Now, most are more intent on building a good place to work than being stars.”
Consider the first line of Satya Nadella’s email to employees on his first day as CEO of Microsoft: “Today is a very humbling day for me.”
Nadella, a longtime Microsoft worker, has rapidly changed the culture at the company since becoming chief executive last year. He’s fostered more teamwork and collaboration among employees who were once pitted against each other through a Hobbesian performance review structure. He’s forged partnerships with companies once considered bitter rivals.
He’s also quick to acknowledge when he’s made a mistake — as he did last year after telling women to have faith in the system to give them the “right raise.”
Microsoft’s stock is up 8 percent since Nadella started.
Apple CEO Tim Cook also embodies the new leadership style. Cook’s been outspoken in his support for gay rights, first coming out as gay in an October 2014 essay for Bloomberg Businessweek, then becoming a high-profile advocate for the LGBT community. He even chastised his home state of Alabama over its treatment of poor people and minorities.
“Here’s a guy who seems to stand up for what he thinks is right,” said Kiel. “He’s also open to admitting mistakes.”
Cook’s 2012 apology for a botched rollout of mapping software stood in sharp contrast to the non-apology offered by his predecessor, Steve Jobs, over an iPhone glitch in 2010.
Under Cook, Apple’s financials have soared.
CEOs who display character run companies that perform better financially, according to Kiel’s research — an exhaustive seven-year study of 84 CEOs across multiple industries.
Kiel defined character using four moral principles: integrity, responsibility, forgiveness and compassion. He also came up with a list of 25 behaviors and attributes that embody these principles, like “telling the truth,” “forgiveness” and “owning up to your mistakes.”
He and his team asked CEOs to assess themselves on these traits, and asked their employees how they would rank their CEOs on the same metrics. They discovered that the CEOs who were graded as having the strongest character brought in five times more for the bottom line than the low-character CEOs.
The CEOs at the bottom, said Kiel, tended to see the world as a dangerous place where people would take advantage of you. They didn’t always tell the truth. They placed their own financial security over the well-being of their company and their employees. Their workers didn’t trust them.
The arrogant CEO started losing favor during the early 2000s with the downfall of self-interested scoundrels like Tyco’s Dennis Kozlowski, of $ 6,000-shower curtain fame, and Enron’s Jeff Skilling and Ken Lay, both convicted of fraud and conspiracy.
The nail in the coffin was, of course, the financial crisis of 2008, when Americans lost patience for executive bravado and arrogance.
“The recession changed everything, and we are just coming out of that on a global basis,” said Gaines-Ross.
Another reason for the change has to do with the way chief executives are hired these days, said George, the former Medtronic CEO, who is a fellow at Harvard Business School and who writes frequently about what he calls authentic leadership. About 85 percent of chief executives are hired from within their company, he said, and “boards don’t easily get fooled by internal candidates.”
George was careful to note that arrogant CEOs aren’t yet extinct. “Wall Street is a little behind,” he said. “There’s so much ego there. Big ego.”
It’s worth noting that the shift in leadership style has coincided with the rise and influence of women in the business world. “Women do tend to be more down-to-earth and genuine,” said George. “But I don’t think this is a gender thing.” There are women who embody the old style, too, he said. (They seem to be pretty rare, though, considering less than 5 percent of Fortune 500 CEOs are women.)
What’s really turned the tide in favor of positive human traits in the corner office is social media. Like other public figures, CEOs can’t escape the ubiquity of Twitter, Facebook, iPhone videos and the rest. If they make a misstep, the world will know. Their employees will know. They will demand answers and apologies. Chip Wilson, co-founder of Lululemon, was vilified on Twitter and Facebook in 2013 after he said that some women didn’t belong in the company’s yoga pants. He ended up leaving the company.
The arrogant superstar CEO was probably best embodied by GE’s Welch, a hard-charging “celebrity CEO” who famously fired the company’s bottom 10 percent of performers every year. The strategy, which was replicated elsewhere, didn’t exactly win the hearts and minds of his employees. Welch’s GE was “where the weak went to the wall and only the strong survived,” as one columnist wrote at Forbes earlier this year.
“It is really hard to find a celebrity CEO these days,” said Gaines-Ross. “Trump is one of the very few.”
When HuffPost asked whether Trump — whose campaign did not respond to a request for comment for this article — was doing well reputationally, Gaines-Ross laughed.
“No,” she said.